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SA’s satellite connectivity industry braces for shake-up

Admire Moyo
By Admire Moyo, ITWeb's news editor.
Johannesburg, 25 Mar 2021

The satellite connectivity industry is readying to open up in SA, with new entrants looking to set up shop in the local market.

So say industry players and analysts following reports that Elon Musk’s SpaceX has opened pre-orders for its Starlink satellite service in SA.

However, the satellite industry in SA has been thriving in the absence of Starlink, with companies like Q-KON leading the charge.

SpaceX began deploying Starlink satellites in 2019, and the service is expected to be available in SA by 2022.

“We welcome the buzz surrounding Starlink, and we are confident it will translate into a desire among businesses to look closer to home for fast, reliable satellite business broadband for facilities ranging from lodges to mines and farms,” says Dawie de Wet, CEO of Q-KON, the company behind Twoobii.

Twoobii is a high-throughput satellite connectivity service, powered by the latest Intelsat platforms and managed by satellite engineering enterprise Q-KON.

“Satellite broadband technology has advanced in leaps and bounds over the last decade, and we are now at the cutting-edge of connectivity across Africa,” De Wet adds.

As to how satellite will compete with the likes of fibre and 5G technologies, De Wet says: “We prefer to view satellite connectivity as an alternative connectivity, not a competing technology; meaning it is not meant to be directly compared in terms of price and performance, and should rather be viewed as a solution to provide connectivity in a different way to fibre and 5G.”

He notes satellite provides services over vast geographical areas. “It also offers extreme high availability, which is not impacted by local aspects such as load-shedding, making satellite an ideal connectivity option for critical services such as ATM and retail point-of-sale connectivity.

“The high availability and on-demand costing options make satellite ideal to provide backup to fibre networks and also as part of SD-WAN network solutions.”

De Wet adds satellite is then the option to connect any user in “off-grid” locations, meaning not connected to the existing telco grids. “While these are generally thought of as rural or remote areas, we also experienced ‘off-grid’ demand in metro areas.”

Expensive technology

Author Goldstuck, MD of World Wide Worx, is of the view that satellite connectivity is far more expensive, far slower, and with far greater latency – all due to the distance of the satellite above the Earth, and the finite bandwidth available for simultaneous connections.

However, Goldstuck notes that for businesses, mines, factories, farms and the like, satellite is an essential stopgap in remote areas where fibre is not possible and mobile signals are weak.

“The promise of 12 000 low-orbit satellites is dramatic, and will have a major impact on speeds and latency, making it a no-brainer for its target market.”

He believes Starlink will be the tipping point for many of these remote entities that avoided satellite because of high cost and high latency.

Nonetheless, Goldstuck cautions: “Starlink will change the satellite connectivity picture – but only once it is widely available. Potential customers must pay close attention not only to ordering availability, but also connectivity availability. They shouldn’t rush to be a first adopter, just because of the hype being created by the Elon Musk brand, but rather wait for user issues to be ironed out and assurances that it operates as advertised.”

He points out the hype is leading to a myth that this is the first accessible satellite connectivity service in remote parts of Africa.

Goldstuck says a wide range of satellites, including those operated by Intelsat, SES and YahSat, already provide commercial connectivity for businesses in SA.

“A wide range of service providers offer VSAT [Very Small Aperture Terminal] connectivity specifically for business applications. A provider like Twoobii has been offering 20Mbps download and 3Mbps upload speeds on a pay-per-use basis for several years.

“It [Twoobii] starts at lower prices than Starlink – just over R1 000, compared to $99 – but that is also for far lower speeds (4 down/1 up) and capacity (1GB per day), at off-peak times. Right now, it remains a viable business option, along with many of the VSAT providers, but they will all probably have to revisit their business models once Starlink is fully operational.”

Dawie de Wet, CEO of Q-KON.
Dawie de Wet, CEO of Q-KON.

Last resort option

Dobek Pater, telecoms analyst at Africa Analysis, concurs that, historically, satellite was significantly more expensive than terrestrial broadband connectivity and had poorer performance in comparison.

“It was used either as a ‘last resort’, where no terrestrial access technology could be deployed at a lower cost, or as redundant connections. This is changing with the new LEO [low Earth orbit] constellations.”

Pater believes satellite broadband will improve in terms of performance and price but it will still be mainly an option for areas that are less densified and more difficult to reach with terrestrial technologies.

With the imminent arrival of Starlink, Pater says: “We are likely to see more satellite connectivity than currently in the residential areas but, in my view, residential and business users will continue to prefer terrestrial technologies (fibre, 4G/5G) where available.

“Part of the reason is price, where users can satisfy their connectivity requirements at a lower monthly price-point on terrestrial technologies rather than satellite. One question is whether Starlink prices will be pegged to the USD or based on the ZAR (for instance, as Netflix had done). If the former, then as the ZAR depreciates to the USD over time, prices of Starlink could become more expensive in ZAR terms and be less competitive against terrestrial connectivity products,” Pater says.

Regulatory framework

Christopher Geerdts, director and senior telecoms consultant at BMIT, believes Starlink and other similar fleets are very likely to be popular in SA.

He notes that innovations such as using satellite connectivity for public WiFi or to connect rural base stations could grow the potential market and extend affordable connectivity rapidly.

However, Geerdts points out SA needs to urgently develop policies and regulations to ensure satellite operators are subject to the same tax and licensing regimes as South African operators.

“Satellite operators also need to work with local partners to ensure some of the customer spend stays in South Africa. At the very least, there should be local investment into reselling and support agencies and also into establishing earth station operations.

“Satellites are well-suited to any under-served areas, particularly remote rural, as well as in cases where rapid deployment is required, or where temporary connectivity is required, such as on construction sites.”

Geerdts is of the view that satellite operators will also target public transport – planes, trains, buses and ships.

“Satellite also plays an important role in providing backup links, when land-based networks have outages, especially since satellites are immune to load-shedding or battery theft in base stations,” he concludes.